Financial Planning Basics

Understanding Financial Planning

You may have heard the term “financial planning” before and wondered what it meant. Maybe you’re started thinking about making your own financial plan, but weren’t sure where to start. Maybe you’ve tried the “do it yourself” approach, and have decided it might be time to work with a professional.

What Is Financial Planning?

To put it simply, financial planning is the process of setting and maintaining a plan in order to help you meet your life goals. Life goals can include buying a home, building a savings, putting your kids through college, or planning for retirement.

The entire process involves many steps to take a “big picture” approach to setting and achieving your goals. If you only look at one area of your financial life and do not examine everything as a whole, there might be weaknesses. This could cause you to lose money unknowingly and unnecessarily.

Through this process, you can identify where you currently stand, figure out your long term goals, and implement a strategy to get there without taking on an inordinate amount of risk, based on your current situation and available options.

The TRUE Benefits of Financial Planning

Financial planning provides a long-term path to help manage all major financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances.

For example, how you fund a qualified retirement plan or pension can have one of the largest impacts on your ability to retire down the road. If what you knew about retirement plans turned out not to be true, wouldn’t you like to know about it? By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also grant yourself a degree of flexibility to handle what life might throw your way. Let’s face it, things change – you must be able to adapt.

Can You Do This On Your Own?

There are plenty of books, TV programs, websites, media, and financial “celebrities” that can dole out more financial advice than you’d ever be able to retain. Does any of that unsolicited advice apply to you? You may want to consider working with a financial professional if:

  • You need help in a specific area of your financial plan. For example, a planner can help you identify places where you may be paying unnecessary extra taxes.
  • You have developed your own plan over the years and would like an experienced set of eyes to look it over.
  • You just don’t have the time to devote to doing your own financial planning.
  • You have taken steps and put a plan into action, but it’s not working out the way you’d hoped.
  • You have an unexpected or immediate need such as inheritance, death in the family, or loss of employment.
  • You feel like a professional advisor can offer something to help enhance or improve your current financial position.
  • You know that you should be setting goals and working toward your future, but you’re just not sure where to start.

If any of these things apply to your situation, you may want to seek professional advice. It is never too early or too late to think about your life’s financial goals.

Call and schedule a free consultation with one of our professionals to see what a financial advisor can do for you.